Greenpeace is concerned that the PIU report
seriously underplayed the role that renewable energy can play
in the UK economy, and that it has left the door open to nuclear
new build. We are also concerned that the Department of Trade
and Industry is institutionally biased towards nuclear energy.
We outline the details of this analysis below. Attached for background
is our original submission to the PIU.

1. THE PIU REPORTIS TIMIDINITS
AMBITIONSFOR
RENEWABLE ENERGY

If the PIU 20 per cent renewable target is adopted
by Government it means that renewables will not be able to replace
the expected decline in nuclear generation at the same time as
contributing to the carbon reductions in the power sector. However
there is considerable evidence from Government studies that renewable
energy can do both quickly and at low cost. It would require targets
to be set higher than the PIU recommendation, and the prioritisation
of government support and public expenditure to renewable energy
rather than nuclear power (see section 2).

The PIU looked at two different targets for
renewable energy for 202020 per cent and 30 per cent. It
recommended the lowest of these on the basis that anything higher
would require new renewables schemes to be built at rates far
in excess of any we have yet seen in the UK. This seems a highly
tenuous basis for defining the UK's renewables target given that
it is critical to the future of UK energy and environmental policy.
It is hardly surprising that there is no domestic experience of
high build rates given that the UK renewable industry has been
struggling to get up and running for the last 15 years. The PIU
reinforce our view that this is a misjudgement by admitting that
higher build rates have already been achieved in other European
Countries.

As Greenpeace pointed out in its submission
to the PIU the Energy Technology Support Unit has already concluded
that 224TWh can be generated from renewable energy at less than
4 p a KWh by 2025[19].
This figure includes an estimate that wave can supply 50 TWh and
offshore wind can supply 100TWh (this ETSU offshore wind estimate
was itself based on the conservative assumption that less than
five per cent of the technical wind resource could be used which
many in the industry would dispute).

Other European countries with much lower wind
resources are setting targets as high or higher than the PIU recommendation:

 Germany, which has an offshore wind
resource one quarter the size of the UK, expects to generate 76
TWh from offshore wind by 2020which is on par with the
PIU's recommended target of 80 TWh for all UK renewables. In addition
the German Government has announced a plan to get 130 TWh or 25
per cent of its total consumption from combined onshore and offshore
wind programmes by 2020.

 Denmark expects to get 27 per cent
of its power from renewables in the next year, having already
achieved 18 per cent.

 10 of the 15 countries covered by
the EU Renewables Directive have targets over 20 per cent for
2010. Some of these are, like the UK, starting from a low base
eg Greece where renewables made up eight per cent of power output
in 1997 is aiming for 20 per cent by 2010.

We would urge the Environmental Audit Committee
to support a higher target for renewables for 2020. We suggest
that it should include the expectation that at least 100 TWh can
be provided from offshore wind and 50 TWh from wave as outlined
by ETSU's assessment for the Governments Renewables Review.

The strategy the Energy Minister appears to
be developing is for the Government to be simultaneously pro renewables
and pro nuclear. This is naïve as well as dangerous. It is
clear that the nuclear industry intends to build new reactors
if it can get the support it needs to overcome the current economic
problems.

It is dangerous because nuclear new build will
increase nuclear discharges in the UK, increase the risk of accidents,
and increase the build up of high level nuclear waste. As the
Royal Commission made clear in its latest report you do not have
to be anti-nuclear to conclude that no new nuclear plants should
be built until there is an acceptable and safe way to dispose
of nuclear waste. They said:

"New nuclear power stations should not be
built until the problem of managing nuclear waste has been solved
to the satisfaction both of the scientific community and the general
public"[20]

This important condition was dropped by the
PIU who downgraded nuclear waste to an issue of public perception.

A pro renewables/pro nuclear strategy is also
naïve because it fails to recognise that there are real conflicts
between supporting one and supporting the otherthe most
obvious is the competition for Government support and public funding.
It is clear that both renewable energy and nuclear power will
require significant public support to deliver large amounts of
carbon free energy. Eg British Energy's submission to PIU says
that the gap between nuclear generating costs and today's post
NETA price is £5-12/MWh which means that to achieve an aspiration
for 10 new 1GW nuclear stations it would need minimum consumer/taxpayer
support of £350-840 million. Whatever the relative distribution
of costs it is very unlikely that consumers, government or industry
will be prepared to shoulder the expense of supporting the development
of two capital intensive electricity sectors.

There will be many specific instances where
nuclear power and renewables are in direct conflict and where
the Government will have to choose which is the priority. We are
already conscious of two:

i. Decision on Climate Change Levy exemption:

By excluding renewable energy from the CCL government
have stimulated huge demand for renewable energy from Commercial
and Industrial users of power. Suppliers are struggling to meet
the demand, which has benefited renewable generators by ensuring
that they see more of the benefit of the O.43p Climate Change
Levy (CCL) in the price they are paid for their power. This market
works because it is "short" ie there is more demand
than supply, and because it is well defined ie "green".
If new or refurbished nuclear capacity receives the benefit of
CCL exemption as the PIU recommends it will be neither: nuclear
electricity will swamp renewables output in the short term, and
muddy the water for CCL exempt electricity by making the issue
of its "greenness" controversial. Utility suppliers
that we talk to have predicted that exempting nuclear power from
the CCL would knock the bottom out of the flourishing commercial
market in green electricity. Given how hard the Government has
had to work to defend the CCL from attack by industry representatives
such as the CBI it seems counterproductive to undermine its value
to this important business sector.

ii. Decision on access to coastal grid connections:

We estimate that at least seven of the 13 nuclear
power station sites in the UK are at key locations for the development
of renewable energy because they are close to areas with large
wind or wave resource, and sit on the strongest coastal grid connections
(Sizewell, Bradwell, Dungeness, Hinkley, Wylfa, Heysham, Calder
Hall). Over the next 12 years nuclear stations are closing at
all of these key sites and a decision will have to be made as
to whether the nuclear industry should be allowed to keep hold
of the connection or whether to reserve them for the renewable
energy industry. Article seven of the EU Renewable Electricity
Directive states that member states "may also provide for
priority access to the grid system for renewables". It is
unclear as to whether the UK Government will do so at these sites,
or whether they will force the renewables industry to pay the
full costs of upgrading the grid at these points. The latter option
could slow or stop many marine energy developments because these
costs can be very large.

In addition to the above sites, Hunterston B,
which may close in 2011, in the Energy Ministers own constituency,
could provide a useful landfall for the undersea cable which the
Minister is proposing to deliver renewable electricity from the
Western Isles to the markets further south. Unless capacity becomes
available on the grid linking Scotland and England from the closure
of nuclear stations like Hunterston B exports from Scotlands huge
renewable energy resource will not be possible without further
expensive grid upgrades[21].

We suggest that the Environmental Audit Committee
oppose the recommendation that new nuclear capacity be given CCL
exemption and that it call on the Government to prioritise grid
access for marine renewable energy to coastal grid points.

3. THE DEPARTMENTOF TRADEAND INDUSTRYHASA
CONFLICTOF
INTERESTS WHEN
MAKING DECISIONSON NUCLEAR
POWER

There is now only one nationalised energy companyBNFL-Westinghousewhose
sole shareholder is the Department of Trade and Industry. The
DTI therefore has an interest in seeing BNFL prosper. Policies
that benefit BNFL will often be at direct disbenefit to taxpayers
and compromise the Departments responsibility to represent the
public interest. The institutional bias of the DTI is evident
in the Departments submission to the PIU which skates over the
inherent problems of nuclear power, such as waste, and produces
very optimistic assessment of future costs of nuclear electricity.
We are concerned that the DTI will resist the PIU recommendation
to internalise the external costs of nuclear power, and that it
will use the Liabilities Management Authority as a back door method
of subsidising BNFL's past mistakes.

We would suggest that the responsibility for
all major decisions on nuclear power be removed from the DTI and
given to the Department of Environment, Food and Rural Affairs,
given that DEFRA already has responsibility for the environmental
impacts of the nuclear power cycle.